Top Ranking Democrats Question ED's New CDR Calculation

By Erin Timmons, Communications Staff 

In a letter submitted yesterday to Secretary of Education Arne Duncan, Senate Health, Education, Labor, & Pensions (HELP) Committee Chair Tom Harkin (D-IA) and ranking member of the House Education and the Workforce Committee George Miller (D-CA), voiced concern over the Department of Education's (ED) recent adjustment to the cohort default rate (CDR) calculation.

“As you well know, CDR sanctions are one of the few accountability measures the federal government uses to ensure institutions are providing students with a quality education deserving of federal support,” Harkin and Miller wrote. The changes to the calculation allow institutions that are not performing well to continue offering loans to students who are at risk of not earning credentials "meaningful enough for students to be employed and repay their debts," they posited.

In a September 23 electronic announcement, ED cited the increase in “split-servicing” situations— where borrowers have at least one loan being serviced by a FFEL servicer and also have one or more loans being serviced by a federal loan servicer— as the primary reason for the change. Harkin and Miller acknowledged that there might be instances where split-servicing led to higher rates of default, but there was “no evidence” that split-servicing resulted in default rates high enough to require sanctions. 

The letter went on to express concern that ED is not doing enough to help borrowers pay back student loans that are in default. In order to "better understand the steps ED is taking to help affected borrowers," Harkin and Miller furnished a list of nine questions that inquire, among other things, about: 

  • the number of borrowers with federal loans in repayment who have at least 2 different servicers; 
  • the specific data ED gathered about the damaging effects of split-servicing that led to the calculation change; 
  • whether servicers who don’t employ the most basic of default rate prevention tactics will be held accountable; and 
  • whether ED is currently evaluating other servicing issues that may result in another adjustment to the CDR measurement. 

The ranking democrats requested that Duncan respond to the letter with answers to their questions within 30 days of receipt.

 

Publication Date: 11/19/2014


Carmen C | 11/21/2014 7:32:50 AM

Easy communication for the students is part of the key.

Clemente La P | 11/19/2014 9:0:34 AM

I warned Department officials 4 years ago that split-servicing would cause damaging effects to Student loan Borrowers. A Department official response was "It is the Borrowers responsibility to know where their Loans are at all times." The Department should explain why they made this issue linger for this period of time.

You must be logged in to comment on this page.

Comments Disclaimer: NASFAA welcomes and encourages readers to comment and engage in respectful conversation about the content posted here. We value thoughtful, polite, and concise comments that reflect a variety of views. Comments are not moderated by NASFAA but are reviewed periodically by staff. Users should not expect real-time responses from NASFAA. To learn more, please view NASFAA’s complete Comments Policy.
View Desktop Version